Split heat pump water heaters (HPWH), where the water tank is separated from the compressor, are having a moment. After a decade of just having one model in the US, we have two new technologies that entered the market in the last year and a prize that will announce the winner of a competition to make a low-cost, low-profile split HPWH next month. A split HPWH is where the compressor is located outdoors and the tank is located indoors. Think: ductless heat pump for hot water. Let’s take a look at why split HPWHs are an important form factor, what buildings they might work in, and what all has been happening. The HPWH size issue A standard American HPWH has a tank and compressor in the same unit. This makes them taller and also requires a little more space than other types of water heaters. A HPWH is generally anywhere from 5–15 inches taller than other types of water heater and needs between 450–700 cubic feet of airspace to pull heat from. For most homes, this is not an issue, a HPWH works great in a basement or garage and I’ve even got mine in my utility closet where it’s been creating thousands of gallons a year of hot water for the past eight years. Our unitary HPWH is in our utility closet right next to our sneaks. It works great for most homes but small homes might have a challenge making these fit. But for the millions of families who live in apartments, condos, and manufactured housing, a taller water heater that needs airspace can be a problem. These homes often rely on small water heaters tucked into closets or tight utility spaces. And when a water heater fails, there’s usually no room (or time) to reconfigure the space to fit a larger unit. The Northwest Energy Efficiency Alliance (NEEA) estimates that more than 2 million homes each year could benefit from compact heat pump water heaters — if they existed at scale. And now NEEA, several water heater manufacturers, and a group of energy efficiency organizations are doing something about it. Enter the Hot Water Innovation Prize NEEA created a Hot Water Innovation Prize, to spur water heater manufacturers to develop a new generation of compact heat pump water heaters designed specifically for tight spaces. NEEA’s Hot Water Innovation Prize has spurred the market to make more models + sizes available. The idea is for manufacturers to build a “split system,” meaning the heat pump and the storage tank are separated. The compressor can be outside and connected to a tank underneath a sink or in a closet. That flexibility can be key in small homes where a small water heater is often tucked into a tight space. History of split HPWHs The idea of split heat pump water heaters has been around for awhile. In the early 2000s, they came to the market in Japan and have been the de facto water heaters there over the last several decades. The first split HPWH to market in the US was the SanCO2, which arrived in 2015 and has been installed all over the country. Consumer Reports ranks it as its #1 HPWH on the market for its efficiency and speed of heating water, but its price point ($5,300) is significantly above unitary HPWHs, many of which cost below $2,000. Two other manufacturers have brought split HPWHs to market in the last 12 months, probably spurred to do so by NEEA’s prize and the upcoming DOE water heater standard. The manufacturers are Ecological (which has a tall skinny tank) and A. O. Smith (which has several tank options, including small low-boys), both of whom I will do deep dives on in future articles. Ecological (left) and A. O. Smith (right) have come to market with split HPWHs in the last year. Affordability of split HPWHs is going to be key for them to have widespread adoption. The homes that can’t fit today’s HPWHs are often smaller and more affordable. That means people missing out on the energy savings provided by HPWHs are also those least likely to be able to afford higher upfront costs. A top scoring criteria for the Hot Water Innovation prize will be affordability, meaning that the winner will have to produce a product that can compete on cost. Winners for Innovation Prize being announced in August The teams participating in the Hot Water Innovation Prize have developed and tested prototypes. Contest judges will announce a winner this year at ACEEE’s summer study in August. And hopefully, following pilot programs and utility demonstrations, we’ll see these new energy-saving water heaters in smaller homes very soon. With new manufacturers on the market and others participating in a prize to be announced this August, we are seeing split HPWHs have a moment. This is great news because HPWHs are one of the easiest wins in home energy efficiency. With the emergence of split HPWHs, we’ll have all the products we need to make sure they fit in every type of home.